Building new refineries still too expensive, says Pertamina
Saturday, June 9 2007 - 12:55 AM WIB
Although Pertamina has signed a memorandum of understanding with a number of local and foreign companies to jointly build new oil refineries, the state-owned oil and gas company is still unsure if it can go ahead with the plan, Kompas reported Saturday.
Pertamina's president director Ari Soemarno said in
"Building a new refinery plant is still too expensive," he was quoted as saying by the daily when he was asked about the company's plan to build a new refinery plant.
Pertamina has signed a memorandum of understanding with a number of companies to jointly build new refineries. The company has, for example, reached an initial agreement with Sinopec of China to build a refinery in Tuban, East Java, and with Kuwait Petroleum to build a new refinery in
Through its subsidiary Elnusa, Pertamina has also reached an agreement with National Iran Oil Company to build a refinery in Banten. With regards the plan to build the refinery in Banten, Ari said that it had been delayed because the Iranian company could not meet Pertamina's requirement to provide the crude oil supply for the refinery.
"We have asked the Iranian company to provide crude supply of about 250,000 barrels, but the company can not meet the requirement," he said. Under the initial agreement, the Iranian company would give a discount for the crude oil supply to be used for the Banten refinery which would cost about US$3 billion to build.
At present, Pertamina operates seven refinery plants with combined capacity of 1.07 barrels per day. The operation of the existing refinery plants are, however, no longer efficient because their outdated technology. (*)